Apple's bestselling iPod digital music player has boosted interest in the company, and people who typically buy PCs from competitors may be more likely to buy an Apple system than before, he said.

There's a better than 50% chance the speculation is accurate, Munster said.

Apple spokesman Steve Dowling declined to comment.

"It's exactly what they should do," said Munster. "This is a dramatically lower price point than they've ever been at."

Apple shares have more than tripled this year, making them the second-best performers in the Standard & Poor's 500 index, behind Autodesk Inc. Munster last month said the shares would climb to $100 within a year after a Piper Jaffray survey found that 13% of iPod users who formerly bought other PC brands had purchased a Macintosh or planned to do so within a year.

A $500 iMac would accelerate that movement, he said.

Apple shares rose 36 cents to $64.80 in Nasdaq trading.

The iMac would still be more expensive than low-end PCs made by competitors such as Round Rock, Texas-based Dell Inc., Munster said. The eMac, built for students, starts at $799 and is currently Apple's lowest-priced computer, according to the company's website. That machine includes a display. The low-priced iMac probably would not, Munster said.

Apple's profit on a low-priced iMac would probably be lower than the company's overall gross margin of 27%, Shaw Wu, an analyst at American Technology Research in San Francisco, wrote in a note to clients Thursday. Wu said the new computer would probably sell for $599 to $699, excluding a monitor, and be shaped like a pizza box.

"We do not have a firm read on timing, but we do believe that such a product/project is in development," Wu wrote. He didn't reveal his source of information.

Dell, the world's largest PC maker, sells some systems with monitors for $440, according to the company's website. No. 2 PC maker Hewlett-Packard Co.'s site sells them with no monitor for $399 after a rebate.